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The Commodity Trading Forum is a presentation of |
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Free Commodity Chart Service |
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The Commodity Trading Forum is a presentation of |
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Free Commodity Chart Service |
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Commodity Trading Discussion Forum
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Why people lose money trading commodites
Posted By: Mouse Man
Date: Monday, 2 November 2009, at 10:22 a.m.
"The fact is that many people do lose when trading commodities. However, the losers are usually ill prepared investors who jump into the commodity markets and lose within six month, never to return again. Others get addicted to the markets, while trying again and again to make a killing with the same strategies and just keep losing.
The good new is that commodity investing is a zero sum game, which means for every dollar lost, someone gains a dollar. Actually, you have to factor in transaction costs, so each person loses a little more than a dollar and the other party gains a little less than a dollar.
So, who makes all the money? It is normally the professional commodity traders and money managers that consistently make money year after year. Also, amateur commodity traders who make money tend to trade for a long time – maybe 30 years. In that time, this trader has probably taken money from hundreds of commodity investors along the way.
Successful amateur traders and professional traders usually trade larger amounts of money. A professional trader managing $1 million may make profits of $200,000 for the year. In reality, he took money from the equivalent of 40 losing traders who threw $5,000 into the markets. Successful traders have usually paid their dues to learn how to trade commodities properly and they follow a strict trading discipline, which most losing traders never adopt."
The above comment was written by a bloger on one of the many websites on the web. It pretty much says it the way it is. The money made is from mostly the small traders that are trading based on published materials, more than experience of factual trading. True, at times, the small traders will have some success followed by giving it all back plus some.
I have found most of the small traders I have met over the years, and there have been many, can tell you about different methods of trading. Sometimes they will even state some of the lessons of let your profits run, and cut your losses. But mostly they lack the experience to trade, and they will seek a method (approach) to trading when they truth is it is the trader that makes the difference more than the method. Large or small.
They also learn from those that have not been successful. using golf as an example. I will walk the lenght of a driving range and more often than not I will hear someone telling a friend what they are doing wrong or what they should do. This would be great if the person doing the telling was a good player, but more often than not they themselves are a high handicapper. I made that mistake when I first started playing golf, and it took many years before I realized I was learning from friends that were in the same boat as myself. Worst yet was when I realized the mistake I started taking lesson from PGA Pro's. It took more time to realize the truth about PGA Pro's. Because someone is a PGA Pro does not mean they understand the golf swing all that well, or any better than your friend. It means they passed a test, and became a member of a big "union" call PGA.
I finally found what I was looking for from a person that had the "skill" of a Tour Player, but because of a genic physical condition he could not play competively.
Let me share only one point he made, swing the club to find what "feels" good to you not a swing that "you" think looks good.
This has been my approach to commodity trading long before I took up golf. I looked for what was comfortable for me, and learned my lessons from those that were "proven" successful not from those that continuely tried and failed. It is my hope that what I learned will help others find the right path to trading commodities, one biggy is finding your "Comfort Zone".
How about sharing what you have found that is comfortable for "you" when trading. Not what you think sounds good but from your personal experience.
Good Luck
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